Ireland

Plea for serious push from government

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It is time for a fundamental rethink of the structure of Ireland's electricity business across the entire island if barriers to wind power in the shape of the dominant utility companies are to be removed. A strong drive from government, not just talk, is needed, according to delegates at Ireland's annual wind conference

The dominant position in Ireland's electricity generation and supply of two major players exerts a potential stranglehold on the market in which renewables will have to compete. This was a main message of this year's Irish Wind Energy Association (IWEA) annual conference, held as the country debates what kind of support is needed to ensure the future of onshore and offshore wind energy.

The dominance of the Irish electricity market by the Electricity Supply Board (ESB) created the most heated debate at the conference. ESB is required to buy output from renewable energy developments with contracts under the Alternative Energy Requirement (AER), Ireland's system of competitive tendering for government support. But delays in dealing with requests for connecting wind projects to the electricity grid network are a source of discontent for many wind energy generators.

John Evans of the Competition Authority blamed the liberalisation of Ireland's network under which Eirgrid becomes transmission system operator but ESB retains ownership of the transmission system assets. "The transmission system is . . . a bottleneck and its effective separation from the ESB is an imperative for competition to work and its benefits to be realised," he said.

ESB owns over 95% of all generating capacity, pointed out Evans. The opening up of Ireland's market for generation has not led to divestiture of ESB's generating assets, neither has its capacity been capped. "In fact the ESB has been actively increasing its generation capacity," he said, citing the Kish Bank offshore wind farm as a prime example.

It is time for a fundamental rethink of the current market structure, Evans added. This should lead to a culling of ESB's generation capacity, vertical separation of its activities and a fully independent system operator.

Competition impossible

Rosalind Carey of IPA Energy Consulting agreed. Looking at the energy market for Northern Ireland as well as the republic she said: "Both markets are gradually opening but two incumbents are still dominant: ESB in the south and NIE/Viridian in the north." With most generation on the whole island of Ireland either owned by ESB or under contract to Northern Ireland Electricity (NIE), it will be impossible to establish a competitive generation market while the two companies are able to control the market price, she commented.

Carey said that an effective all-island market in electricity would remove almost all barriers to an all-island market in renewables. She believes that trade would still be viable between north and south despite different support schemes for renewables in Northern Ireland and the Republic.

open to discussion

Replying to some of the criticism of ESB, Orla Halpin from ESB National Grid insisted the company is not attempting to be obstructive. "We are very open to discussions with the system operator on any developments that would help connect more wind," she said. Karl Leavy from ESB customer supplies pointed out that ESB is merely implementing government policy for stimulating renewable energy in Ireland. There are no other bodies who can bankroll the development of the wind industry, he said.

Taking exception to Leavy's claim that ESB is "bankrolling the industry," Declan Flanagan from Airtricity countered that the supply board is paid handsomely by its public service obligation levy, which is ultimately recovered from the final consumer.

The Irish Wind Energy Association's (IWEA) conference was held in the popular tourist town of Westport, County Mayo on April 26-27. The IWEA recorded its highest ever attendance of 240 delegates and 11 exhibiting companies. The absence of the Minister for Enterprise, Joe Jacob, who was scheduled to appear, was a disappointment, but hardly surprising given that all Ireland's members of parliament were busy electioneering in the run up to the general election on May 17.

In his stead, Tom Kennington from the Department of Public Enterprise announced to a packed first session that a further round of the existing Alternative Energy Requirement (AER) would take place later this year (box). Meantime, the government will consult on the form that future support for onshore and offshore wind should take, he said.

Many newcomers were seen at this year's conference -- including more solicitors and bankers than ever before. Banks increasingly like Irish wind farms, explained Tony David from Bank of Scotland, Ireland (BOSI). "In the case of BOSI, our experience has been pretty good. We believe the industry has shown itself to be viable and have become very comfortable with it," he said. "The key message for developers is: you have the banks at yes already."

Nonetheless, a gloomy picture overall was painted by Jonathan Hore of Dublin based Economic and Social Research Institute. The institute forecasts that Ireland is going to greatly increase the gap between its Kyoto commitments and its actual greenhouse gas emissions, he said. In 1998 the country had already reached its Kyoto limit of a 13% increase in emissions above 1990 levels; in 2010 emissions will have risen to over 20% above 1990 levels. Moreover, renewables' share of the country's electricity by 2010 is more likely to be 10% than the target of 13.2%, he said. "We are going to be very much dependent on gas, which leaves us vulnerable to gas market volatility." At the moment wind is cheap relative to gas, he added. And taking into account environmental considerations, its future economics will be working even more in wind's favour.

The wind industry's targets are 7% of electricity from wind by 2005, 15% (1500 MW) by 2010 and 30% (5000 MW) by 2020, Tim Cowhig of South Western Services reminded delegates. "To reach these targets, reasonable prices need to be offered for green energy," he said. "The grid needs to be operated efficiently and it is very important that we have clear national planning guidelines for wind projects."

It is time that existing planning guidance for wind, which dates from 1995 and 1996, is further updated, Cowhig pointed out. He called for a national spatial strategy for wind development. Local authorities should give developers specific planning criteria for wind projects, mapping their regions to show where wind farms would be viewed positively as well as no-go areas. He also called for planning decisions within specified timeframes and for grid connection to be considered at the same time. This would avoid the present situation where several AER 5 wind farms -- which all have received planning consent -- are held up by the need to gain separate consent for the grid connection.

Tax incentives essential

Only the best wind sites in the country are economically viable at present, Cowhig said. With the government not willing to pay enough for green energy, tax incentives are essential if many of the current AER projects are to get built. They would help small and medium sized projects raise equity and share the risks and rewards of wind energy between the government and public, he explained.

Paul Kellett from the Renewable Energy Information Office drew a similar conclusion. "A fair return needs to be given for development of wind energy for a variety of sites," he said. Ireland has the best wind energy resources in Europe. "A wind turbine on the west coast of Ireland produces twice as much electricity as the same wind turbine in Germany. We have a huge advantage and the price is extremely competitive; we need the right structures to take the industry forward."

The essential difference between Ireland and countries with a higher wind energy penetration is the degree of political support for wind, he said. "It requires lobbying from the wind industry. But you are up against the existing fossil fuel lobby and they have years of experience in political lobbying," he warned.

"We have not had a strong drive from central government," Joe O'Mahony, from conference sponsor Lagerwey, a Dutch wind turbine manufacturer, told delegates at the conference dinner. "We have not had strong leadership. We have had a lot of talk, a lot of promises. If we really want to drive this industry we need a push from government to speed us and to remove the obstacles to getting some wind power in this country."